PLEASE ANSWER QUESTIONS 1 and 2

Question 1.

Preferred stock differs from common stock in that:

a.		preferred stock dividends are fixed.
b.		preferred stock investors have a higher required return than common stock investors.
c.		preferred stock usually has a maturity date.
d.		common stock investors have a required return and preferred stock investors do not.

quesiton 2. Lily Co.paid a dividend of $5.25 on its common stock yesterday. The company's dividends are expected to grow at a constant rate of 8.5% indefinitely. The required rate of return on this stock is 15.5%. You observe a market price of $78.50 for the stock. Should you purchase this stock?

	a	No, the growth rate in dividends is too far below the required return.
	b	Yes, but only if you can keep the stock for at least 5 years.
	c	Yes, the market price is below the intrinsic value of the stock.
	d	No, the market price is above the intrinsic value of the stock.